The Portland City Council authorized the transfer of $8.1 million from an internal reserve fund meant for pension obligations to help pay for a costly computer upgrade, according to a city audit released Tuesday.

That change didn't violate any city policies, the audit said. But it did amount to a switcheroo, and the City Council ought to have a policy that ensures internal reserves are used for their stated purposes, the audit said.

Portland issued about $300 million in pension obligation bonds in 1999. At the same time, the city also created an internal reserve to protect the general fund from the obligation. The city won't pay off that debt until 2029.

Since 2008, however, the city has moved $8.1 million from the internal reserve to help pay for SAP -- the city's controversial software system whose price tag ballooned from $14.2 million to $47.4 million. It also moved an additional $600,000 from reserves to pay for a policy analyst position, the audit found.

"The city’s internal debt reserves are only protected by internal policies, which make them more susceptible for other uses," the audit read. "Creating and maintaining internal reserves are long-term decisions that may span multiple city councils and bureau officials. One way the city could demonstrate its consistent commitment to the purpose of these internal reserves is through council action. For example, the city has a General Fund Reserve guided by clear policy direction over its use, reserve level, and conditions for when the reserve can be used. Council could adopt an ordinance or resolution to formally protect the internal reserves, and these decisions would remain in force until another council action removes that commitment."

The audit's recommendations address a small portion of the city's debt reserves.

Portland had about $3.3 billion in debt at the end of fiscal year 2011-12. Only about 10 percent of that debt had internal reserve funds. Another 10 percent had no reserves.

But the audit found that the city did a good job of following the rules for the nearly 80 percent of debt that had reserves created due to external legal requirements.

"We found that the city consistently adhered to requirements for legal reserves, but could strengthen its practices over internal reserves," the audit read.